Not everyone can be heard in federal court. The gatekeeping function of Article III’s “injury-in-fact” requirement – which mandates that a plaintiff have suffered an ‘injury’ that is actual and concrete – is a well-established hurdle for plaintiffs seeking to get a foot in the door in federal court. This requirement, referred to as “standing,” can be particularly difficult for plaintiffs to meet in privacy cases, where they may struggle to articulate traditional economic or physical harm.
While standing is a hurdle, it is not an insurmountable one. In the absence of controlling Supreme Court authority, jurisdictions have applied varying standing requirements. Some, including the Ninth Circuit, have lowered the bar. Last month, in Robins v. Spokeo, Inc., the Ninth Circuit held that simply pleading a statutory violation (there, of the Fair Credit Reporting Act) may establish Article III standing. (See our post on Robins.) During last week’s conference, the U.S. Supreme Court considered whether to grant certiorari to a recent Eighth Circuit decision and resolve the issue for good. This morning the Supreme Court denied certiorari.
The case, Charvat v. Mutual First Federal Credit Union, arose from insufficient notice of a $2 ATM fee. 725 F.3d 819 (8th Cir. 2013). Plaintiff Charvat made three separate ATM transactions, and paid the $2 fee for each. At the time, the Electronic Fund Transfer Act (EFTA) required ATM operators to provide notice of such transaction fees in two ways: (1) on-screen during the transaction itself, and (2) on the ATM machine (“on machine” notice). Charvat received and accepted on-screen notice of the fee during each transaction, but neither of appellees’ ATMs provided the latter “on machine” notice. Charvat brought putative class actions against each ATM operator for violations of the EFTA, alleging this lack of notice constituted an “informational injury.” The defendants moved to dismiss for lack of subject matter jurisdiction (i.e., the court lacked the authority to hear this case) because Charvat had not suffered an injury-in-fact, and thus had no standing to bring his claim. The district court agreed.
The district court dismissed Charvat’s claims for lack of standing, holding that “informational injury” did not satisfy Article III’s injury-in-fact requirement. The court acknowledged that EFTA provided for actual and statutory damages, which “indicat[ed] Congress’s intent for private causes of action despite minimal or no actual damage.” But the fact that the statute provided for statutory damages (i.e., damages that require only a violation of the statute, not actual harm) did not automatically satisfy a litigant’s Article III standing burden. In the Eighth Circuit’s view, lawmakers could not “erase” the Constitutional requirement of an injury-in-fact by “statutorily granting the right to sue to a plaintiff who would not otherwise have standing.”
The Eighth Circuit disagreed, and held that an informational injury alone is sufficient to confer standing, even without additional economic or other injury. While the court agreed that Article III requires more than an “abstract statutory violation,” Charvat met this burden because he had been personally denied the required notice, and had been charged a prohibited fee during a transaction. The court distinguished these facts from a hypothetical situation in which Charvat might have “simply heard from an acquaintance that Appellees did not provide ‘on machine’ notice.” Per the court’s holding, the EFTA granted consumers a right to notice, and violation of that right vis-à-vis the Plaintiff sufficed as an injury under Article III. Accordingly, the Eighth Circuit reversed and remanded for further proceedings, and the defendants appealed to the Supreme Court.
While this would have been a new opportunity for the Supreme Court to finally decide this issue, it was not the first. In First American Financial Corporation v. Edwards, the Court came very close: in 2011, it granted certiorari to hear the question of whether a plaintiff suing an underwriter for failure to disclose a “kickback” – in violation of the mandatory disclosure requirements of the Real Estate Settlement Procedures Act – could show injury-in-fact by merely alleging a statutory violation. First Am. Fin. Corp. v. Edwards, 610 F.3d 514 (9th Cir. 2010), cert. granted, 131 S.Ct. 3022 (2011). But in June 2012, the Court reversed course and ordered the writ of certiorari dismissed, without further discussion.
Had the Supreme Court decided to review Charvat, its decision could have had a far-reaching impact. It might have conferred automatic Article III standing on any plaintiff alleging a statutory violation, or alternatively, could have shut the door on many privacy actions by declaring that Article III requires a distinct and palpable injury. But with this morning’s denial of certiorari, the question continues to be one with which each jurisdiction must wrestle on its own. Caveat Vendor is Paul Hastings' Consumer Issues blog. We welcome your feedback. Please contact our blog editor with any thoughts or suggestions.